Dividing assets can have long-term consequences when a couple ends their marriage. Transparency is important for an equitable division.
But spouses face the temptation of hiding assets during a divorce to keep more money or just out of spite. A spouse may get an unfair advantage by concealing money and property before informing their partner that they want to end their marriage.
There are many typical and long-existing methods and places to hide assets. These include deception and delay.
One common method is using antiques, artwork, or hobby equipment. Spouses convert cash into these costly assets and then under-report their value. Stay alert for these purchases, especially at their office.
Cash enterprises may be used by a spouse to pocket cash without reporting it on tax returns and financial statements. Lifestyle costs that seem to exceed your joint income or a spouse with lots of cash are signs of unreported income.
Setting up a custodial account in the name of a child is another common method. The child’s social security number is used.
Spouses may use their assets to pay off outstanding debt instead of sharing the cash with their spouse. Sometimes, a phony debt will be paid to a friend who will return it after the divorce.
A spouse who owns a business may pay a nonexistent employee. After the divorce, the salary checks are voided.
Likewise, a spouse may pay for phony services or products with the complicity of a family member, friend or significant other. Payments are made from private accounts or by funneling revenue from businesses. The money is then returned to the spouse after the divorce.
New relationships may also bring new financial outlays. These are paid for items such as gifts, travel, rent, jewelry, and tuition.
Investing in bonds with no interest does not require reporting. These investments usually include municipal bonds or Series EE Savings bonds.
Delay is another method to hide assets. For example, a spouse may put off receiving compensation such as bonuses or stock options until after the divorce.
Signing long-term business contracts may be put off. This is used so that a spouse does not have to report income or, so that the compensation is not received until the decree is issued.
Attorneys can assist spouses looking for hidden assets and take steps to protect their rights. They can pursue a fair and reasonable property division.